Chip shortage may force automakers to cut features

The re-evaluation of plans comes as customers of the world’s fourth-largest automobile market try to cope with the global chip shortage which started in 2020

Indian automakers may take a page from the playbook of their counterparts abroad and eliminate fancy features that require more chips in the cars they make, according to analysts and industry watchers.

The re-evaluation of plans comes as automakers of the world’s fourth-largest automobile market try to cope with the global chip shortage which started in 2020 and is showing no signs of ending, forcing automakers to cut production, increase prices and delay fulfilling orders.

“Everyone is exploring the option. I don’t know of a single OEM (original equipment manufacturer) who is not exploring it,” an auto analyst told DH on condition of anonymity, adding that the companies were looking to zoom in on models that require fewer chips.

Also Read: Ukraine war seen pushing chip shortage well into 2023

US automaker General Motors had to temporarily drop heated seats – a popular feature in cold countries – on vehicles in response to the chip shortage, CNBC reported earlier this year.

Indian car buyers might instead have to make do without features such as a 360-degree camera, in-built internet connection and voice-assist which turn a car into a moving computer.

While a 360-degree camera helps a driver park better in tight spaces by providing multiple viewing angles, other features such as the Internet of Things (IoT) allow drivers to control everything from navigation to music by syncing their cars with their smartphones.

Companies might not cut car prices even if they eliminate the fancy features, experts said.

“Automakers will not have to bring down prices if they want to cut some features. They can just cross that out from the available features a variant comes within its brochure,” said an auto expert who did not want to be named.

Some disagreed, citing that cutting features might force carmakers to make specification changes.

“It is not a shortcut. It requires time to develop. And, sometimes, you need to do the homologation again,” said Shashank Srivastava, Senior Executive Director - Marketing & Sales, Maruti Suzuki, referring to the process of certifying that a particular vehicle was roadworthy and matched certain specified criteria laid out by the government.

“We haven’t done it yet. Earlier, we thought it wasn’t a great idea. But the crisis has prolonged for a long time and therefore we are examining it,” Srivastava told DH in April.

However, in a subsequent email in May, India’s largest automaker declined to share details, saying “we have no such plan to cut down on features in our cars.”

Mahindra & Mahindra and Audi India declined to comment for this story.

Some others acknowledged the challenge tied to the chip shortage but did not shed more light.

"As a brand, our efforts are to give customers the complete option of customisation of their Lamborghini. There are challenges, however, we are doing our best to allow our customers to personalise their Lamborghini with our ‘Ad Personam’ programme and have their unique Lamborghini resonating with their lifestyle and personality," Lamborghini India Head Sharad Agarwal said in an email to DH.

While there was no consensus on how complicated and time-consuming the task of cutting down features was, experts agreed it was certainly possible.

“And this is what has been happening with respect to people managing the features that they want to sell. (Companies are) increasing the waiting period for trim variants which they don’t want to focus on – for instance, If you have a couple of variants for which there is a supply crunch, you quote high waiting periods for that and turn customers to accept another variant for which there is enough supply,” said one of the analysts quoted above.

All the analysts and experts quoted in the story wanted to stay anonymous as they wanted continued access to the companies.